(Bloomberg) -- Abu Dhabi is looking to tap international debt markets soon, according to people familiar, selling what would be the emirate’s first bond since 2021 to join a flurry of issuance by emerging economies this year. 

While Abu Dhabi doesn’t need fresh funding, it’s looking to boost the liquidity of its existing debt, said one of the people, who asked not to be identified because they’re not authorized to discuss private matters. A fresh benchmark would also assist the bond-sale plans of government-related companies. 

It wasn’t immediately clear how much the sheikhdom, which is part of the United Arab Emirates, is planning to raise or exactly when a deal would happen. Abu Dhabi’s issued at least $2 billion every time it’s tapped the dollar bond market in the past decade.

Bloomberg News has reached out to the UAE and Abu Dhabi representatives for comment.

Oil-rich Abu Dhabi’s plans to issue debt follow sales by the likes of Mexico, Brazil and neighboring Saudi Arabia earlier in 2024 to take advantage of lower yields on US Treasuries, which raised the attractiveness of higher-risk bonds. 

Emerging-market governments have sold about $58 billion of dollar debt so far in 2024, the highest amount for this time of the year in at least two decades. With the expectations of lower interest rates running hot in the market, now may be the best time for new deals in case the US Federal Reserve doesn’t ease policy as soon as expected.

Abu Dhabi’s sovereign debt is rated at the third-highest investment grade by the three major agencies, with a $3 billion bond falling due in September. S&P Global Ratings said in November it expects the emirate to issue external debt annually of about $2 billion to maintain a presence in the market in addition to repayments, which average about $3 billion a year. 

The September 2031 bond is quoted at a yield of 4.66%, according to pricing compiled by Bloomberg. Since Gulf sovereigns’ debt sales are typically dominated by long-only investors, weighing on the liquidity of the instruments, current pricing isn’t indicative for a fresh issuance, said one of the people familiar. 

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Economic growth in the wider UAE has been robust post-pandemic. The economy is arguably the most diversified in the Arab Gulf, with oil-rich Abu Dhabi developing into a haven for international money, attracting family offices or outposts for investors such Bridgewater Associates founder Ray Dalio and Egyptian billionaire Nassef Sawiris.

--With assistance from Srinivasan Sivabalan.

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